Tackling redundancy one step at a time

One of the most common questions we receive from employers here
at Workforce Guardian is: 'how much redundancy pay do I
need to give to my departing employee?'.

While this might seem like a straightforward question, our
response often opens a can of worms.

This is because the calculation of redundancy payments is
the final step in the
redundancy process.

When we send back our advice, we often make passing mention of
the steps which should have been taken leading up to this point.
More often than not, the client then gets back in touch for help
because they skipped some - and in many cases - all of
the steps we've mentioned.

This isn't a trivial matter that we can easily fix
because - while our consultants are very good at what
they do - they can't turn back time.

And an employer's failure to comply with all their obligations
can have very serious consequences.

In the worst case scenario, the employee may even become
eligible to lodge an unfair dismissal claim on the basis of a
'non-genuine redundancy'.

So, let's consider the steps in detail.

Firstly, before an employer even considers making a position
redundant, they should ensure they know whether the employee is
covered by a Modern Award or an Enterprise Agreement.

If they are, it's then absolutely critical they fully-comply
with the 'consultation' related obligations which
will be imposed by that Award or Agreement.

Remember: this formal consultation process must take
place before a final decision
regarding the redundancy is made … not
after!

Next, the employer should make absolutely sure that the work
being done by the employee is no longer required to be done on the
same basis/in the same way as it is now.

If, for example, a current full-time employee is simply going to
be replaced by a new full-time employee once they're gone, the
redundancy won't be genuine.

In contrast, a downturn in demand which means the current
full-time position will be replaced by a part-time position is a
classic case of genuine redundancy.

Lastly, the employer must carefully consider whether it's
possible to redeploy the employee somewhere else within the
business, or in any other 'associated
entity'. All potential
redeployment options should be considered - not just those which
offer similar terms and conditions to the employee's current
role.

Only after all of the above steps have been taken - and only
after the employee's submissions have been fully and carefully
considered - should a final decision regarding the redundancy be
made.

And only then should attention turn to the calculation of the
employee's redundancy payment.